Changes

:... The consumer surplus is the total benefit which a buyer gets when buying a good. For example, if someone wanted a new laptop so badly that he was willing to pay $1800 for it, and he bought it for $1500, then his consumer surplus is $300.  Consumer surplus = total benefit - total cost  (Mark)

:... The consumer surplus is the total benefit which a buyer gets when buying a good. For example, if someone wanted a new laptop so badly that he was willing to pay $1800 for it, and he bought it for $1500, then his consumer surplus is $300.  Consumer surplus = total benefit - total cost  (Mark)

3.  Suppose your favorite hobbies are reading books and hiking, and imagine that they have the following values for marginal utility.  The first hour that you hike gives you lots of utility:  10 units.  But as you start to tire, you enjoy and benefit from it less.  The next hour of hiking is worth only 8 units of utility (in other words, it has a marginal utility of 8 units rather than 10), and the next hour of hiking is worth only 5 units, and then 3, then 1, and then zero for the next hours, in that order.  Your marginal utility for reading books does not decline so quickly.  In the first hour, reading a book gives you utility of 6 units; the next hour is worth 5 units; the next hour is worth 4 units; and then 3, 2, 1 and 0.  Suppose that you have 5 extra hours today.  How should you spend those hours on hiking and reading in order to maximize your utility, and what will be your total utility for those 5 hours?  Explain your answer.

3.  Suppose your favorite hobbies are reading books and hiking, and imagine that they have the following values for marginal utility.  The first hour that you hike gives you lots of utility:  10 units.  But as you start to tire, you enjoy and benefit from it less.  The next hour of hiking is worth only 8 units of utility (in other words, it has a marginal utility of 8 units rather than 10), and the next hour of hiking is worth only 5 units, and then 3, then 1, and then zero for the next hours, in that order.  Your marginal utility for reading books does not decline so quickly.  In the first hour, reading a book gives you utility of 6 units; the next hour is worth 5 units; the next hour is worth 4 units; and then 3, 2, 1 and 0.  Suppose that you have 5 extra hours today.  How should you spend those hours on hiking and reading in order to maximize your utility, and what will be your total utility for those 5 hours?  Explain your answer.

5. Explain why the shape of an indifference curve for two goods that are perfect substitutes is a straight line going from the upper left down to the lower right.  Extra credit:  why must its slope be negative 1?

5. Explain why the shape of an indifference curve for two goods that are perfect substitutes is a straight line going from the upper left down to the lower right.  Extra credit:  why must its slope be negative 1?

6.  Describe either the "income effect" or the "substitution effect."  Take your pick.

6.  Describe either the "income effect" or the "substitution effect."  Take your pick.

:Free market is the most important aspect in the economic world. In the free market, people are attracted to the good or service because there will be a reciprocation. Charity is the giving away of a good or service without gaining a reward. Free market gives an incentive for people to work for gain and then give charity to those who are in need.  (Allie)

:Free market is the most important aspect in the economic world. In the free market, people are attracted to the good or service because there will be a reciprocation. Charity is the giving away of a good or service without gaining a reward. Free market gives an incentive for people to work for gain and then give charity to those who are in need.  (Allie)

===Honors===

===Honors===